September 7, 2021

In August, PH inflation reached a 32-month high of 4.9 percent

Last August, the pace of price rises reached its highest level since January 2019, at 4.9 percent, although the Bangko Sentral ng Pilipinas (BSP) believes that the inflation forecast remains generally balanced, with inflation expected to be within a goal by the end of 2021.

In a Viber message to journalists on Tuesday (September 7, 2021), BSP Governor Benjamin Diokno said the August 2021 inflation rate is within the central bank’s 4.1 to 4.9 percent forecast range for the previous month and is consistent with the central bank’s “assessment that inflation could settle close to the high end of the target range in the near term before decelerating back to within the target range by year-end.”

“Over the policy horizon, the risks to the inflation forecast remain roughly balanced,” he added.

He attributed the rise in international commodity prices owing to supply-chain constraints and the rebound in global demand to the upside risks to inflation and aggregate demand.

These variables, he claims, are offset by “the development of new coronavirus strains,” which leads to “stricter lockdown measures and a delayed restoration of the economy.”

Inflation increased from 4% in July to 5% in August, owing to rises in the highly weighted food and alcoholic beverage index.

This raised the eight-month average inflation rate to 4.425 percent, which is higher than the government’s goal range of 2 to 4%. The inflation rate was 2.4 percent a year ago.

The inflation rate for 2022-2023, according to Diokno, would “likely decrease towards the middle of the goal, backed by the continuing and timely implementation of non-monetary measures and reforms to directly address supply-side pressures on essential food items.”

“Looking forward, the BSP is prepared to continue its accommodating monetary policy for as long as it is required to support the economy’s sustained recovery to the extent that the inflation forecast permits,” he said.

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